A government program to help homeowners facing foreclosure reached its cutoff date this week, falling short of its goals by roughly $500 million. With $500 million back on the table, one has to wonder why the department of Housing and Urban Development can’t find a mere fraction of that amount to restore housing counseling funding.
The Emergency Homeowners Loan Program (EHLP), which received funding of $1 billion from Congress earlier this year, reported it had doled out only half of those assistance funds by its deadline this week.
Administered by HUD, the program was expected to help as many as 30,000 households. In fact, it helped fewer than 15,000.
Rep. Barney Frank, an author of the legislation that launched the program, told the New York Times this week that the ineffectiveness of the program is attributable to poor implementation and administrative problems.
“They dragged and dragged their feet,” Rep. Frank told the Times. “I believe it was not one of their priorities.”
The program, which offered unemployed or underemployed homeowners up to $50,000 in zero-interest loans to pay mortgage debts, was launched by HUD in June with an original cutoff date in late July. The program was subsequently extended several times.
The funds will be returned to the Treasury if HUD does not dole them out by Friday.
Meanwhile, HUD’s housing counseling funding, slashed by Congress earlier this year, is scheduled to run out out on October 1. That funding, in total, was $88 million, only a fraction of which was allocated to HECM counseling. Total funds appropriated for housing counseling funding under a recent Senate Appropriations bill were $60 million, but until the House and Senate agree, counseling is still unfunded.
It begs the question, with half a billion dollars in unused funds, isn’t there some way to prevent the unfunded counseling mandate that reverse mortgage borrowers now face? With funding running dry beginning next week, the counseling is becoming more difficult and more expensive to obtain.
“It doesn’t make any sense. This is short sighted,” Kathleen Day of the Center for Responsible Lending told RMD of the counseling funding cuts. “It’s just like a lot of ingredients that went into [the current] crisis,” she said.
Written by Elizabeth Ecker